When HR Fails an Audit: The ripple effect

By Michael Fagan

It’s a daunting task these days to comply with the numerous state and federal employment laws. Laws and regulations continue to expand. To justify their agency budgets, the regulators who enforce those laws are becoming more aggressive as they seek to recover money from violators. Failing an audit is painful. How can you avoid that pain? Leverage technology that unifies multiple HR technologies in one place, digitize any physical files and automate manual processes. Make sure your technology provides real time audits and compliance monitoring. That will allow you to get a complete view of each employee file in one place and ensure you will be ready and have a favorable outcome if a regulator knocks on your door.

If you don’t comply with employment laws, you may be fined and face possible criminal penalties. There is a broader ripple effect to failing an audit. There is a multi-departmental impact. HR and your business leaders and their team members will be distracted from their usual task and will have to scramble to find the documents you need to have a favorable outcome. If you fail the audit, it will be publicized and damage your reputation. You may also have trouble attracting talent. In addition, your business will become a future regulatory target, you will be scrutinized by that agency for a period of time, and your regulator may tell other agency regulators to audit you. The ripple effect is real. The Solution? Engage with a knowledgeable and trusted partner that can arm you with an ROI analysis to support acquiring technology to avoid this painful outcome.

Employment laws are numerous and the retention guidelines they impose are complex, can be confusing and often may contradict each other. How do you ensure you comply? First, partner with a technology vendor who possesses substantive expertise in HR best practices. That knowledge will be invaluable during the interactive process that occurs as you implement the technology. Their knowledge will also likely be manifested in the functionality within their solution. Furthermore, ensure you choose a solution with retention features that allow you to only keep records as long as necessary. Most importantly, make sure you can get a unified view across all your HR systems, hard copy files and automate manual processes; it is critical to fully leveraging real time compliance monitoring the right solution will offer.